Have you ever wondered why your next-door neighbor must have a new car in his driveway every model year?
And not just a new car, but a new car with all the bells and whistles, like that 18-valve, turbo-charged, dyno-flex, hydroponic 4000 engine, 57-speaker audio system with Sistine Chapel acoustics and the buttery soft leathers imported from recently-discovered islands off the Madagascar coast?
It turns out he is just giving in to the inclinations that characterize too many American big spenders, who gain their greatest joy from acts of overspending.
That’s right, many humans are simply pre-programmed to overspend, an action that illuminates the pleasure centers of their brains. To these people, saving lacks sex appeal. It is spending, not saving, that is sexy.
This is among the groundbreaking and revealing factoids presented in “Thinking Money, ” a new documentary released to the nation’s public television stations October 16.
Check your local listings for time and channels in your neck of the woods — or contact your local Public Television Station about “Thinking Money.”
What a concept
For generations, commercial television programs have manipulated viewers into stupid financial tricks using a variety of carefully-crafted stratagems.
Take, for instance, a sitcom portraying a group of struggling young people who live together. Rather than a hovel, they reside in a big city apartment Bill and Melinda Gates would find unjustifiably luxe. Their clothes and hair styles would require a $10, 000 weekly budget, wardrobe assistant and makeup artist.
When the laughs are interrupted for commercial breaks, the air is larded with 30-second spots for luxury SUVs and lavish cruise vacations. The viewer comes away from the experience entertained — and also convinced that the only way to be happy is to remain perennially in debt indulging her consumerist instincts.
But “Thinking Money” actually takes the 180-degree opposite approach.
It shows us why we are so susceptible to hucksters peddling everything from 32-carat diamond broaches to candy-apple-red sports coupes, why we go on overspending when we know our futures depend on over-saving, why we are sitting ducks for slick-talking Madoff-esque serpents peddling risky or ultimately fraudulent investments and why we spend too little time searching for best credit cards. These, the documentary tells us, are all natural biases common to a huge swath of the human population, and they tend most to impact us when we are dealing with complex, long-term decisions.
“Thinking Money: The Psychology Behind Our Best and Worst Financial Decisions, uses a mix of humor, on-the-street interviews and provocative insights from innovative thinkers to explore why we spend, save (or don’t) and how we think about money, ” a press release for the show proclaims.
“Host Dave Coyne travels from Wall Street to Main Street, and from Yale to Santa Barbara wine country, to find out how our brains — and the marketplace — maneuver to get us to spend money we shouldn’t.”
Emotional trumps rational
As any used car salesman could tell us, people are given toward making spending decisions with their emotional brains. “Thinking Money” explains how this works. Having reached decisions emotionally, we use our brains’ rational side to justify the decision. “The only long-term solution for this is to make saving more sexy … for the brain, ” reports Stanford neuroeconomist Dr. Baba Shiv.
That objective better be realized pretty quickly. The documentary shows us how bad financial decision-making is wreaking havoc upon us and our society.
As Americans increasingly live paycheck to paycheck, the number of predatory credit sources has ballooned. It was once fairly difficult to find a payday loan establishment. Today, we learn, that there are more payday loan stores in America than there are McDonald’s, Starbucks and Targets — combined.
Then there is confirmation bias, a seemingly growing hindrance to effective saving. Confirmation bias is our tendency to be drawn to information that reflects what we already believe, and shun evidence that contradicts our convictions.
If, for instance, you feel the odds of saving enough to retire are stacked insurmountably against you, you are likely to seek that kind of messaging and ignore evidence of the many people who actually do bank enough bucks for retirement. The result? You give up before you even try to save.
If, in the depths of 2008, you believe the stock market is a rigged game that can only leave you busted, you will seek folks telling you never to even dream of investing in equities. And over the next six years, you’ll miss out on one of the greatest bull markets ever to stampede the financial markets.
Finally, there is the exploding information overload about college planning, retirement preparedness, and the bonds, stocks, mutual funds and ETFs that can help you line your ducks in a row.
So overwhelming is the information avalanche that some Americans wind up paralyzed when it comes to making both the small and big decisions, and head into their 65th year with $27 in retirement savings.
An oasis of insight
So if you would like to avoid the financial trap in which all too many of your neighbors find themselves, track down “Thinking Money” and consider the time you watch a shrewd investment in your own financial futures.
American television was once famously termed “the vast wasteland.” If that is true, “Thinking Money” just might be a little buried treasure tucked amid all the sagebrush and dirt.